Thank you for standing by, and welcome to the Steadfast Group first half 2023 interim results call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Robert Kelly, Managing Director and CEO. Please go ahead.
Thank you. Good morning, everybody, and thank you for joining the call. It's, this is a very important call from our own point of view as we're 9 and a half years from the date when we floated this business and heading towards the 10th time we report an annual report. We're very keen to make sure that the trajectory of what this business set out to do back in 2013 is demonstrated. I ask you to. I'll refer to the page numbers on the pack.
If you go to page four, you'll see that that's our track record since we went to the market and said, "We wanna be a publicly listed company, and we wanna show EPS growth, and we want to show steady and accretive growth that you can rely upon." I won't bore you by reading each one of those out there, but the litmus test of the success of this business is that when you look at all of those nine graphs that you've got there, that they are growing progressively, that they are growing in line without any erratic movement, and that they are steady and reliable if you want to invest in an organization that's in insurance broking, underwriting, and distribution.
You'll see on the Sometimes I'm asked on the bottom right-hand side about INSIGHT and saying, "Have you not done as many as you have?" We've done a huge amount of integration. Sometimes, when we have two or three brokers and we merge them together, the amount of brokers will go down. We're, as you can see, we're continuing to grow in size. It's an outstanding product and continually improving. It's a living piece of software that we continually improve. The Steadfast Client Trading Platform just to the left of that shows you from its infancy stages, where it's now progressed to the billion-dollar plus mark on a contestable platform. That's really, as I said, the litmus test of Steadfast sits on that page.
That's what we've promised, and that's how we deliver, and that's the history of our delivery and what we intend to do. Getting back to the first half, I'll refer you to page 5. The NPAT went up 18.2%. Our EBITDA rose 22.5%. NPAT, as I said, compared to last year is AUD 90.2 as opposed to AUD 76.3. The NPATA up 18.8%. The diluted EPS NPAT up 7.7%. Of course, the fruits that we bear of our efforts is the half-yearly AUD 0.06 per share half dividend that we pay. This is exactly what we set out to do. If you look at the statutory earnings, they're slightly down on last year.
Basically, it's very simple to explain. We paid more for some of the businesses who exceeded what we expect them to do. Under accounting terms, we have to take that off. It's a great result. On the right-hand side, our equity brokers and including the full network aggregated underlying EBITDA of 21.9%. Outstanding. The underwriting agencies, again, on an aggregated view, EBITDA up 19.1%. Our diluted EPS is impacted by the capital raise we do, but that levels itself out over a period of time as the revenue comes in from the acquisitions that we've bought. Our acquisition growth, we completed all EPS accretive acquisitions, net cost of AUD 449 million, including Insurance Brands Australia.
We're on target to complete the trapped capital acquisitions we predicted in FY 2023 of AUD 220 million and already at this stage completed about 80% of those in this financial year. From a future growth point of view, Stephen still has AUD 227 million to fund acquisitions. Distribution network is outstanding. Our total distribution of GWP calendar year was AUD 13.4 billion. It's amazing when you think about that, the proportion that that is of the Australian intermediated and MGA market. Turning up, there's a little footnote there saying PFC is. We're often asked about PFC, and they're friends of ours, but they grew and they're no longer a seed, they're a flower.
A flower needs to water its own and its own self and feed itself. None of these figures include PFC, which effectively haven't been part of us since July last year. Although we have helped them by keeping them on our client training platform through to May this year. We're friends, we're not enemies. As I said, it's no longer a seed, PFC, so it has to grow and feed itself. I'll refer you now to page. This is the reference to Trapped Capital. As I say, we in the first half of 23, we had the IBA acquisition, and we completed 27 Trapped Capital acquisitions. As you can see there, the ratio looks towards the ratio what we'd like to buy going out.
In the second half of 2023, we've already completed 5 acquisitions. We've got 10 term sheets out, and we're completing due diligence on those acquisitions. A further 3 term sheets are between the stage of acceptance and due diligence, and there's just under 50 other opportunities coming in there. If you look across that line, the estimated acquisition cost bears up to the ratios that we like to keep and still able to do. We've still got AUD 326 million Trapped Capital pipeline of opportunities and that we've deployed AUD 177 million this year.
Reflecting on page 7, this is important because whenever you set out to do something like we did back in 2012 and a float in 2013, you're gonna go on an acquisition trajectory, you're only as good as your performance. A bit like a football game. You can win this week, but next week you've got to win as well. Our track record is proven, it's successful. We complete accretive acquisitions to our earnings. Our long-standing and dedicated internal acquisition team work very hard on this. We're able to keep together the nucleus of the people that worked on the float.
We've got people now that have worked for us for 10 and 11 and 12 years and understand exactly the DNA of this business, what we're trying to do. When due diligence is undertaken, they satisfy the criteria that's been successful for us over in excess of a decade. Our acquisition growth has been complemented by a track record of continued organic growth. If you look at what we try to do is try to buy, we try to maintain the EBITDA, and in fact, we exceed the EBITDA, and we improve the EBITDA, but then we work on the organic growth with a lot of the services that we can provide into it.
In aggregate, our acquisitions have delivered at least the expected EBITDA at the time we acquired the businesses. It's actually a system that we look at in terms of the capital we deployed, the EBITDA that we bought, the organic growth that we're achieving through it. We monitor that on a monthly basis. The bar charts down there give you some analysis of what that really looks like. The next one on page 8 is a really important and strategic set of pie charts. It's in my view, something which I know the whole company here is exactly excited about, the acquisition team is.
If you look at FY 2013 at the IPO, we virtually purchased the equity brokers, which were about 25% of the GWP. We had AUD 1 billion that we purchased, and the network still had AUD 2.9 billion on outside it. That was the status quo when we came to the market. We asked you to support us, and you did, and that's what it looked like. If you go to the right-hand side and you look at our FY 2022 pro forma, we're on track to do AUD 11.5 billion. Again, that excludes just PSC. We want no confusion in the market about our turnover includes PSC. That's not derogatory statements, it's just a clarification.
You might call it a cleansing statement to say, "This is what we've got." This is a fascinating pie chart on the right because it now knows that that AUD 1 billion that we had in 2013 is now AUD 5.2 billion and 46%, which is an amazingly transition and shows you that the acquisition strategy and the way we run a network absolutely pays dividends. You look to the bottom there's another 8% identified in our track capital acquisitions. Still, on the left-hand side of that pie chart, there's still AUD 6.3 billion of GWP in the network that eventually we want to do some sort of merge, buy or divest.
We're here as a friendly and reliable source of acquisition for those people. Just on page nine, a little bit of a summary of what we see about the world. Heading up with the reinsurance market, you'd have to be in another planet not to understand what's gone on over the past couple of years with reinsurance. It's reaching an incredible crescendo in this particular time. The rate of attritional and catastrophe claims has not ebbed. If you go back to 2011 when the Brisbane floods hit, that was in plan that something like that could happen. Since then, there has been no plan, no parabolic curve that you can rely upon, no actuarial projection to say weather has changed dramatically.
As such, reinsurers are requiring higher retentions and significant rate increases. Absolutely significant is an understatement. The rate increases and the retentions are amazingly high. What does that mean? Well, the escalation of cost to the Australian insurers and the ability to retain more risk is impacted by the inflation of claims. All of that adds up to they have to keep driving price. I think you can reflect upon the statement that Andrew Horton made at the QBE results to say, "They have to drive price." We're very fortunate to have a couple of great MGAs that we run with QBE, and we're very much aware of that, and we work side by side on that.
When prices increase for the cost of insurance, we have to unfortunately drive price through the MGAs, and that means the consumer pays more. It's a fairly simple system. Just on PSC, they haven't been part of the network since July 2022, and they're not included in our GWP for FY3 and beyond. As I said before, in a spirit of cooperation, they're friends, okay. We've kept them and allowed them to stay on the Client Trading Platform till the 31st of May this year, when I believe they've got systems which will be able to take over that business. The thing that everybody worried about, including ourselves, was the Quality of Advice Review. Commission or fees seems to be pretty well accepted.
It's the most effective way to remunerate people to distribute general insurance placement. However, what has come out of Hayne and Michelle Levy is the disclosure remuneration is essential. The consumer should be aware of the total remuneration. As you see the third bullet for conflicted remuneration is not in the consumer's interest. The inset there is, in our view, conflicted remuneration is volume-based. If you get volume-based commission, that's conflicted. To the SCTP, we continue to increase our product and broker participation. We continue to increase the policy wordings and the integration capacity to onboard insurers more effectively.
We're now finding that insurers all around the world, and we work on a world market to understand this, are now accepting that the ability to communicate digitally with distribution has to be made more simpler. In the old days, the insurers would produce a chunk of system that would allow you to do some things with them. Now, in modern terms, the API systems now are starting to be rolled out all around the world. The ability for us to get the SCTP into a range of insurers will broaden out over the next 18 months from that point of view. Remember, it's important part of our strategy to continue the development and enhancement of the client trading platform.
We've always been asked repeatedly about what we will do with the assets of the Client Trading Platform. I'm pleased to tell you that it is still an incredibly viable and world-leading technology. There's nothing out there that does exactly what it does in the world, all around the world. We continue to increase the product and we continue to look at how we can apply that internationally. Over the last three years, more particularly in the last 18 months, we've been looking at what we could do with that system and what we could do with the software.
We've now formulated a view, and as we've spoken before, Sam Hollman will go into the role of CEO of our international assets and spearhead this part of what we're going to do. The reason we're not elaborating on it at this stage, because it's a little wider than our first thoughts about what we could do with the Client Trading Platform. When we formalize what we're gonna do there, which will be towards the end of this year, then we'll share it with you.
I would say by the end of calendar year 2023, we're in the position to tell you what we've, what we feel, what we've done as a result of probably five years investigation, three years, and more particularly 18 months of intense. Obviously on the ESG side of the business, it's crucially important. So much so that the building that we operate here in, we have five floors in Bathurst Street. We considered whether we could stay in this building, so we had a complete evaluation. We own those five floors. We have a complete evaluation done externally to find out that this building is actually okay from the CO2 point of view, so we don't have to move.
We're very keen to have a carbon neutral position, and we're very keen to make sure that it's workable and that it's scalable and that we can use it in head office, in our equity brokers, and then flow that through to the network so that as they're queried about what's going on in the world and what they're doing, they can rely on something that we've spent an incredible amount of time on and going forward. If you look at page 10, the broking industry, the broking division has had the same growth. GWP growth by 14.7% to AUD 5.6 billion. 11.5% of that being organic growth. Price increases across all the non-statutory lines continued and volume increases was circa 0.3%. Okay. Sorry, 3%. I'm sorry.
Yeah, 0.3%, we wouldn't even put it in there. 3%. Thank you. Network GWP is 86% commercial lines and 14% retail. If you just go across to the right-hand side to the square box there, you'll see that we had 11.5% organic. Again, we point out we got growth in the AR networks of 2.9%. This is an ever-increasing part of distribution in the Australian insurance industry, and we are players in that. Of course, 3%, 0.3%, 3%, 0.3%. I'll try and get it right this time. 0.3% of the was attributed to new brokers accounting for 14.9%.
Operationally, as you can see, we've got 342 brokers in the Australian network, 53 in the New Zealand network, 22 in Singapore. We continue our investment activity in the network from first half 2023. 20 new equity holdings, including bolt-ons and 2 step downs. Remember, when we do step downs, that's bringing people into our businesses where we own equity and giving and selling them equity. Of course, that means we're gonna get a reduction in EBITDA for that percentage we do. We have to pick that EBITDA up when we're getting organic growth. It's a great system. We've got some wonderful partners in it. Steadfast now has equity interests in 70 of our brokers.
Client Trading Platform, yeah, so the GWP plus 22% on a rolling twelve, just AUD 1.4 billion in the first half, but just under AUD 560 million. Steadfast equity brokers, including the network, underlying EBITDA of AUD 151 million or 21.9%. If you want details for that, have a look at the slide. Go to page 11. This is the underwriting agencies. People keep saying to us, "When, when is this gonna slow down? When is it not going to be good?" I have to tell you and explain to you that as the insurance companies have to rise prices and they have to be more restrictive about what they do, then they have to look at a portfolio on a portfolio basis.
An underwriting agency has a delegated authority to underwrite in specific areas. If they have the agility to be able to say yes or no to something without having to go through some of the ramifications that the structure of a general insurance company has in getting its authorities pushed through. What happens in hard markets, the agencies become agile, the insurers become restrictive, the brokers know that they can go to specific underwriting agencies to get underwriting expertise and get placement or not placement. They don't get mucked around. They can come back.
These agencies continue to grow as what was a sidebar 10 years ago or 15 years ago is now a mainstream way for general insurance brokers to place a whole range of businesses that will never go back to the insurer. They will still maintain. Highlights, Steadfast underwriting agencies grew 18.8% in the first half to the billion-dollar mark. That was driven by price, also driven by volume. People are coming and saying, "Hey, can you do this business?" In circumstances where they've got correct delegated authority, they will do the business.
Property line pricing remains strong, and capacity constraints in certain lines mean that insurers are saying, "We're not gonna do that." An underwriting agency will have capacity in that and has the ability to do it. There are opportunities for agencies as insurers are repositioning product lines and that means that distribution will approach agencies after being sort of frustrated or turned back or slowed down by an insurance company. Underlying EBITDA plus 19.1% of AUD 82.1 million. We're very fortunate that that was made up of organic growth, you can see on the right-hand side there, of 15.2%, and some acquisition growth of 3.2%, giving us the 18.8%.
The operating highlights, we continue to roll out robotic operations contained within the agencies to do the mundane work that more efficiently in underwriting agency pricing and underwriting business. Long-term strategy, we're closely aligning our capacity providers for technology and continuing a strong service ethic. People will come back to you if you answer their questions quickly and you can give them a solution. We benefited greatly from the price hike of our from the strategic partners. Also we've gained market share because of our expertise. Participating on the Client Trading Platform, we've got five product lines: Business Pack, commercial property, ISR, strata liability, and professional indemnity. They're not completely full. We are backfilling other insurers coming to some of those lines.
The Business Pack is pretty well full. We're bringing a new player onto that at the moment. It's designed to allow people who wanna come on to compete on a contestable platform at a fixed commission rate where there's no volume involved. The spinoff for us is the second last bullet point there. We have the best data analytics on over AUD 1 billion worth of GWP in the Australian market, is unbeatable. In fact, the insurers come to us to ask us about their portfolios, and we can tell them instantly. It's live data, it operates all the time, it's 24/7, and we are continually enhancing what we can deliver from that point of view. Last bullet point, 20 underwriting agencies, over 100 niche products.
Have a look at slide 38, that'll give you an idea of what it looks like. Remember this, very importantly, all our underwriting agencies are available to the entire market. There are nothing that we do which is exclusive to Steadfast. They have to get out and be competitive for everybody in the market and provide service for our competitors. That's why we've got the largest group of underwriting agencies in Australia because we cater for the entire market. On page 12, that's an analysis of the current Insurtech. It's pretty simple. It's a contestable platform. It serves the consumer really well. The product...
The policies are aligned with what we found in our claims triage, what needs to be clarified, how we take ambiguities out of certain sections of the policy. A Client Trading Platform policy is a far superior policy to a policy that you can get down Sunrise Exchange. It's tailored based on a dozen years of our experience with our errors and omissions program and our triage program to exactly make sure that the consumer gets what they expect to get when they buy a Client Trading Platform policy. We do remain focused on, you know, improving the Client Trading Platform. We continually work to automate the back-office rating systems with the insurers.
That's as slow because they have so much legacy systems that they, that they have to work with, and it's a very difficult thing. The next product line we're rolling out, for instance, is farm. 9 insurance lines, 17 insurers and underwriting agencies are partners on SCTP. INSIGHT has 185 live brokers, just under 5,000 licenses with an extra 22 brokers lined up to be converted and 68 others that are in discussions with us. On the right-hand side, we've done AUD 8.6 million quotes through it. We've just under AUD 560 million first half. That AUD 560 million first half have been put through it. Growth of 22%.
Last year, a rolling 12 at AUD 1.046 billion and an annual growth rate of 16%. You can see the bar chart demonstrates that rather effectively from that point of view. The good part is on page 13, and I think this is outstanding. About our interim dividend is up 15.4%, so it's AUD 0.06. It's tremendous to see that all the heat and talk about the market and how it's going forward, and prices are rising, is demonstrated in the fact that we are able to produce profits that allow us to distribute those profits back to you. There's no discount on our DRP. The ex-dividend date is 27th of February.
You can see records 28. DRP's 1st of March and payment's on the 22nd. Then on the right-hand side, you can have a look at the performance of our share price. I refer you back to page 4, and that's what we're in business for. We're in business for, to have capital provided by the public and to re-reward the public by producing profits. I'll now hand you over to Stephen, who will also give you the fun part of this and run through his finances. Thanks, Stephen.
Thanks, Robert. I guess it's going to surprise nobody who's followed insurance sector to understand that we've had a very strong premium rate rise, and that together with us executing on some of those trapped capital programs we've been talking about, does help us lay down some pretty strong numbers today. As per usual, on slide 15, we start with the reconciliation of underlying results to stat. The prior period had a number of significant one-off profits that we called out as nontrading. This year, they were not so large. While you have a reduction in statutory earnings, you still have that healthy increase in underlying earnings. As per usual, we strip out our mark-to-market profits from Johns Lyng investment. As part of our trapped capital program, we acquired further interest in our associates which have now become subsidiaries.
We removed the profit that resulted from the revaluation of our initial interest in those associates. We also remove any profit on sale of businesses or any tax costs that we've incurred on those transactions. We also had a loss on some earn-outs, which means we ended up paying more for the business than what we originally expected because they delivered more profits than anticipated. It's probably the best $9 million we could say that we spent. Just going through to slide 16. We turn now to those headline underlying results for the first half of 2023. It's a significant uplift in earnings with strong increases on every metric. We recorded revenue increases of 27.2% and 22.5% increase in EBITDA.
Those increases were the result of both the hard insurance market together with the acquisition growth, of which Insurance Brands was the largest. The trapped capital program obviously contributed strongly in that acquisition growth as well. There have, of course, been cost pressures, which we've talked about before, with the tight labor market, meaning significant pay rises that we recorded on one July. Also a full return of a fair bit of discretionary spend, being the marketing convention, sponsorships, travel, entertainment. We've effectively now, if you like, rebasing that cost base to what it used to be. Given that we had the 12 months ago that wasn't there, we obviously had a little of extra spend that we knew was coming through. Probably about AUD 5 million really, returning to those expense lines in the half.
Given that we had second half 2022, seeing that return of spend as well as first half 2023, we don't anticipate that expense line to be growing as much in the second half, which means that the revenue growth rate and the EBITDA growth rate would converge as we progress through this next half. We also recorded, as you'd expect, higher interest rates on some of our debt facilities and the amortization of our customer lists, meaning our NPAT rose 18.2%. The earnings per share was up 7.7%. We had a caller on the last time saying, asking about our methodology. There is an alternative methodology which we could have used, where you know, spread the share cost increase over the just the six months.
That actually would have meant we would quote a 9.9% increase in our EPS. Whichever way you use, there's no calculation on the full year impact. It's only how you calculate the growth in each of the 6-month periods. Importantly, we've previously guided to you that our earnings per share growth will be skewed to the second half, given we got those discretionary spend returning to full swing in first half 2023 as it was in second half 2022. Less drag in our future upcoming second half. Secondly, we adjusted the wage base, meaning those additional leave accruals hit immediately in first half 2023. Insurance Brands, like the vast majority of our brokers, is more heavily second half skewed with the strong June sales. The uplifted rate environment has a more meaningful dollar value impact on our second half organic growth.
Of course, we raised capital upfront and deployed it through the year on our trapped capital. The earnings in first half 2023 will be proportionally lower than second half. This, together with a further hardening of insurance premiums, the strong January result meant we were able to upgrade guidance last week and uplift our full year EPS range from that 5%-11% bracket to that 10%-15% bracket. Our price rises that we're seeing, we originally forecasted 5% to 7.5% type rate increases. That's now coming through at more of that 7.5%-10%, and we're going to assume that that absolutely carries on through the rest of second half 2023. We also saw some good volume growth that Robert called out there at 3%.
There has been no signs yet of any diminished SME sector in the Australian economy. Our current forecast assumptions on acquisition growth metrics remain broadly in line with what we told you in our original guidance. That is, that we will complete the AUD 220 million of trapped capital acquisitions in this financial year. If you're going to review the guidance that we gave originally in August and compare it to the new outlook, the key reason for the uplift is that our original forecasted 6%-12% organic growth is now revised upwards to that range of 11%-16% based on the first seven months of trading and that expectation of continued hard market conditions. Going through to slide 17. This slide dissects our 22.7% EBITDA growth into some of the key components which we've shown there.
Organic growth, 9.3%. Acquisition growth, 13.2%. We've talked about the strong rate environment. We've also had interest rate rises on our deposits. Just as a side note, around about AUD 7 million increase from those interest rate rises compared to about a AUD 5 million cost on our, on our borrowing. A nice little tailwind for us. Given we've now finished some of our hedging, it might be more like AUD 7 million uplift from the second half and AUD 6 million expense. It's still an uplift for the going forward.
It's still a natural hedge, isn't it?
Absolutely a natural hedge, in fact, a positive for us overall. We talked about the cost increases, particularly those corporate office costs coming through. Even though you do see quite stronger growth rates in the broking and in the agency slides we're about to show you, those other costs do come through here. Obviously, we had a little bit more IT spend and a little bit less capitalized on the balance sheet. That comes through here on the organic growth. You actually have, you know, the overall growth rate there dialed down to 9.3% overall. The acquisition growth includes the financial results from over AUD 150 million of trapped capital acquisitions done in the first six months, plus Insurance Brands at AUD 275 million or AUD 276 million, plus that AUD 25 million earn-out.
The run rate, of course, from prior year acquisitions. Importantly, we should put on record that Insurance Brands, just like Coverforce in the prior year, have delivered the underlying results in line with our purchased EBITDA expectations. We currently anticipate paying a large proportion, if not a full payout, of that AUD 25 million deferred earn-out for Insurance Brands. That was dependent upon their delivery of the FY 23 results. You'll recall that we negotiated defense mechanisms with that earn-out trigger for up to AUD 25 million of the purchase price. We also received a healthy increase in earnings from trapped capital as we closed out a number of acquisitions pre-Christmas. As you saw from what Robert said, we've done effectively a transaction a week. It's been a pretty busy time.
That AUD 177 million that we spent to date as of today was around about at 10x EBITA multiple. We do anticipate hitting and maybe exceeding that AUD 220 million target for FY 2023, given that healthy and increasing pipeline of opportunities. Effectively, at August, we told you about AUD 400 million of opportunities. We've now chewed through some of those, in total, that AUD 400 million has now risen to AUD 500 million of opportunities, of which we've now executed AUD 177 million. Until such time as we do actually chew through those ones, we're not yet prepared to uplift that guidance metric around acquisitions. Let's complete that, the remaining AUD 43 million first. The acquisitions that we have done this year would deliver another 4% growth into next year. That's now being factored in for us.
The seasonality for our earnings, we think there is a, as we said, a strong second half coming up. We think round about 44%-56%, if you're going to the midpoint of the guidance, assuming there's no further, let's call it major corporate transactions beyond the trapped capital that we've talked about. Slide 18, we go through to the results for the broking and agencies as if we own them all 100%. We've taken out any profit shares to analyze the position more consistently. For the brokers, you see that we've noted 77% ownership, up a couple of %, particularly driven by Insurance Brands being 100% ownership. That's really made up for 72% of pure broking and 100% ownership of our network.
There was 11% organic growth in the top line revenue as well as on the bottom line EBITA. In line with those GWP movements. Hard market conditions obviously coming through. We've talked about the expense increases coming through. Contained in that top line growth is a 3% policy count increase, so a good uplift in volumes. In addition, we have that 12% growth in revenue from acquisitions with 11% increase in EBITA. We expect the margins to slightly improve across the full year with the above inflation rate premium rises counteracting the slightly lower increased cost base coming through in the second half. Going through to slide 19, the agencies from which we own roughly 91%, has for a fifth year in a row, continued to trade ahead of expectations throughout this period with solid performances across most businesses.
Organic revenue growth, 19.3%. It's a strong result. 17.7% growth flowing through the bottom line. Hard market conditions strengthened further. In our large businesses, we were probably the forerunner on the price increases required from the insurers, Strata in particular. For some, they continued their volume expansion with great opportunities to win business based on that superior service on the niche products. They've continued to implement those process enhancements from AI that Robert spoke about, but we've also had to manage the increased compliance and regulation costs. We do anticipate a small decline in margins, but not enough to mute their strong uplift in underlying profits, of course. Going through to slide 20, our business do convert profits into cash. We had over 100% of our AUD 111 million NPATA converting into cash.
The chart details how we calculated that AUD 129.6 million worth of cash flow from operations. Our first half is always seasonally strong because we collect those large billing months of June and even May into that first quarter. Our debtor days continue to be equal to or better than the historic pre-COVID levels. I would note our premium fund business has gone superbly well. The collections have continued again without concern, which we think is another great test for SME business and where they're up to with their cash flows. Again, arrears significantly better than pre-COVID lockdown levels. Of course, the AUD 60 million worth of free cash flow we have again, well and truly invested into our ongoing acquisition activity.
In terms of our balance sheet on slide 21, you know that our position activity was partially funded by the new capital raise. Thank you for supporting us, the shareholders. We had obviously some from the free cash flow and some financed through debt. As of today, we've utilized AUD 433 million of our AUD 660 million debt facilities, leaving AUD 227 million plus free cash flow for future acquisitions. We do, of course, have an additional AUD 300 million accordion facility we could activate if required. Those facilities extend partly November 2024, but also the November 2026 as shown on the slide. I've talked about them, the hedges before, that most of those have now, unfortunately finished, but there is still AUD 50 million-AUD 60 million that is still hedged.
Our gearing ratio, importantly, is fairly conservative, 19.1%. When we did the capital raise, we took 17%. With the latest round of acquisitions, we are now 19%. Could we debt fund all the, you know, the trapped capital acquisitions from our AUD 227 million of debt capability right now? Our gearing ratio would go to more like 25%. Well, I think that's probably it for me. I'll hand over to Robert.
Thanks, Stephen. Look, I'll just to conclude look, before we get to questions, page 23. I mean, it's from us as a hardworking company and a group of people that are dedicated to it, so it's wonderful to upgrade the guidance to AUD 420 million to AUD 430 million on an EBITDA basis. The NPAT from AUD 198 million to AUD 208 million, and then the underlying EPS, 10%-15%. These look like railway numbers. I can tell you these are difficult numbers to achieve. These are numbers that require the whole mechanism that we operate this business on to fire and for every individual section of the business to interact with one another and go forward.
We're pretty proud to announce that upgraded guidance with, and again, the NPATA from AUD 242 to AUD 252. We're proud of that and we think that it continue on, and the business is extremely strong from that point of view. There's some caveats there. The guides are subject to continued premium rate increases by insurers. I can tell you I've been saying that for 3 years now, yeah, and there is no respite coming. Completion, of course, of the balance of the AUD 43 million trapped capital. That's in play. No, it's economic out trends or many global uncertainties. We don't know what impact that could have. At the moment, we're not seeing any of that. That the key risks are set out in 48 and 49. That's the caveat we put over that.
Our organic growth has exceeded our expectations. Our acquisition growth is meeting our expectations. The trapped capital continues to meet the forecast that we wanna do. I'll conclude on that now and hand you back now for questions. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Andrew Buncombe from Macquarie. Please go ahead.
Hi, guys. Thanks for taking my questions. Congratulations on the result. The first one from me is just in relation to PSC leaving the network. Can you just give us some color around the potential implications for the PSF, but also were they paying you an annual membership fee to be part of the network? Thank you.
Okay. It has no impact on the PSF because they've not been included in our PSF negotiations. Basically, from the day that we went from the M&A system, the marketing administration system, over to the PSF, they were not included in our negotiations at that time. In terms of the revenue we were getting out of them, we were only charging them an access fee, which is peanuts. It doesn't even rate. There's no loss of revenue for us, and there's no impact to our PSF.
Excellent. Then the only other question from me was just in relation to slide 6, please. Just on those final 62 brokers in the trapped capital pipeline, so the 49, the 3 and the 10. How many of those do you already own stakes in? I'm just trying to understand how many new acquisitions compared to roll-ups. Thanks.
Most of them are new. There have been, you know, if you look at the last 6 months, you know, perhaps 4 or 5 transactions that would relate to increasing equity stakes. The vast majority relate to new stakes in new brokers.
New stakes.
Of brokers in our network, yeah.
Sure. Maybe just a quick final one in relation to slide 17. This is probably something that's been asked in previous years, but just to remind me, why are you not defining bolt-ons as acquisitions? What's the background there? Thank you.
Well, CAU.
Okay.
Brokers will continue to buy small brokers and stuff like that, really.
Yeah. We've always, I guess, taken the view that if broker number one used to have AUD 10 million sales and now they've got AUD 12 million sales, whether they bought a small bolt-on portfolio, whatever, or happened to hire someone who had some fees with them, that it's still really called broker number one. To make sure that we clearly delineate that for whichever way an analyst wanted to analyze it, we made sure we showed the two columns, and people can call it whatever they want.
Understood. That's it from me. Thank you.
Thank you.
Thank you. Your next question comes from Kieren Chidgey from Jarden. Please go ahead.
Morning, Robert and Stephen. A couple of questions. Maybe, Robert, just sort of following on your comments from the great data analytics and insights you get and can provide back to insurers. Just wondering if you could sort of talk about, at a high level, the sort of claims inflation that you see through the data you can access and also, you know, what changes you see as we look out to sort of second half 2023, 2024 in terms of the likely some insured drivers in addition to sort of risk rate changes on a go-forward basis?
It's a good question, Kieran. The reality is that insurance has, for the most part, an 80% coinsurance clause that accepts that you could be 20% out in your sum insured and they won't prejudice you for that. There is repeatedly breaches of that when you see claims that come in. Clients have got to put a percentage of the claim that they have to bear themselves, the coinsurance part of it. That if you look at that pre-COVID, the sum insured was struggling to be at a 100% or at the 80% mark.
You take COVID into play. You have the impact of the supply chain drag and the inability to get people to work for you on cheaper pricing, then labor's up, cost of goods are up and supply chain lag is impacting claims. Let's say that claims are gonna rise by 10%, which is a very conservative figure. I've seen cases where the claims inflation is twice that and sometimes three times that in specific areas of property. Let's say that 3 years ago that they were borderline, not fully insured and breaching the 80% coinsurance mark, and then the cost of building before COVID was escalating and hadn't been built into the equation. During and post-COVID, the impact of the cost of rebuilding is dramatic.
We've had some examples that we've seen where prices were quoted at AUD 940,000, and now it's AUD 1.4 million. This is not a price gouge. This is, well, labor's gone up dramatically and goods have gone up dramatically. I think that there's going to be 2 things that's gonna occur before you're gonna get any respite in the cycle. Firstly, that generational change from being under-insured to being appropriately insured. That's probably a 2-year journey over the next couple of years. I mean, we invested in Robertson and Robertson, in advance of this to the valuations firm to make sure that we could give that access to the brokers, give to their clients to make sure that the correct replacement value is in.
That's, that's working in some sectors for us. I think that you've got a couple of years run before the correct sum insured comes into play. During that couple of years, the insurers have got to drive rate. Their cost of reinsurance is horrific at this stage. I mean, just from our own point of view, with CHU, we were paying 12% of the premium back 10 years ago for reinsurance, and they're paying 32% of the premium for reinsurance. We have to drive rate to. That's basically considered cost of claims on top of everything else.
If you're running at a 35% claims ratio and you've got to put in 32.5% for reinsurance, you have to drive rate to get back to a margin so that you want to achieve. A good margin on property should be in a combined of in the high 80s to the low 90s. That should be the margin, not in the high 90s to just over 101. Without a doubt, that's what it's gonna look like over the next 2-3 years.
Thanks. That's great color. Just 2 quick questions, or points of clarification. The equity stakes in your broker network, 46% currently. Can you just provide us a view as to where that will land if you complete the AUD 220 of TCP spend by June?
Yeah, we've got on the slide there that you'll see that it's total of 8% of GWP that is tied up in around about AUD 300+ million of potential spend.
To clarify that 46% is that 46% of the sale, yeah, we own the business that's on.
Yeah.
As Stephen's saying, that the trapped capital adds another 8% to that. That puts us up to 54%.
Yeah. The AUD 326 million represents, you know, sort of about AUD 1 billion worth of GWP there. That if you were gonna do AUD 220 million, it'd be about two-thirds of that.
Yep.
You're talking about probably 5, another 5%.
Okay. Thanks.
Yeah.
And the,
That we actually control.
Second.
That we actually control.
Yep.
That we control.
Yep. The other quick question, Stephen, you kind of highlighted the net interest rate leverage given the cash interest exceeds debt. Just wondering if you can remind us whether there's any lag in terms of the cash pickup you get on the cash interest, or does it flow through pretty cleanly with higher cash rates?
It's been flowing through fairly quickly. Obviously, the competition from banks, you know, you never know when they. They're pretty quick to put the interest rates up on their, on the, on your lending and questions how quickly they come through on the borrowing. I can tell you at the moment, the banks are definitely competing to get that term deposit money. It's coming through fairly quickly at the moment.
All right. Great. Thank you.
Actually being proactive on it. Actually, they're being proactive on it. They're ringing and saying, "Hey, you know what? We can give you this," which has changed. Yeah.
Thanks guys.
Thank you. Your next question comes from Jason Farmer, from Taylor Collison. Please go ahead.
Thanks for your time, good morning. A couple of questions from me. The first one was just in respect of international expansion. You've touched on plans or some plans around the Client Trading Platform and the network broking platforms and maybe leveraging them overseas. Have you had any thoughts around some of the operating agencies and how they could expand overseas, as well as maybe replicating your Australian business in another market as well? This is independent to Unison.
Look, I think, I think to answer that question twofold is that in some jurisdictions, our agencies would be very, very well received. I mean, for example, if you look at North America, it's over-serviced by wholesale broking and by wholesale placement of business. If you were going to look at North America, you'd be very circumspect about whether you could take an MGA over there 'cause there is a plethora of them operating in the market there. However, if you look at other parts of the world, some of our MGAs could go into various jurisdictions very easily. For instance, cyber, you know, our cyber business is one of the strongest cyber suppliers in the Australian market.
That's been built on expertise on risk management and protocols to put in place so that you don't get cyberattacked before you actually do the risk transfer and transfer it to an insurer. That would fall over. In terms of the when you uplift it, whether you bring your IT into a jurisdiction, actually have a look at the distribution in the jurisdiction, you look at the inadequacies in the jurisdiction in terms of IT, all of a sudden you look at the fragmentation of the distribution there and the inept parts of that distribution, where a system such as what Steadfast has developed and built over the past 26 years would actually seamlessly fit in and be simpatico with the way they would want to operate.
All you read about in the press basically is the Acrisures and the Brown & Browns and the Ardonaghs and the Gallaghers buying the mid-end and the top-end of the town. Nobody has paid cognizance to parts of that, of the markets, which were very similar to circa 1995 in Australia, where you have a big range of people that are not being serviced efficiently because of the insurers concentrating on the mid-market or the upper market and ignoring that lower market. The potentiality for doing something in that area is something that we have to look at.
Thanks for that, Robert. Are you sort of suggesting there's a two-pronged strategy there? There's a technology strategy and maybe a distribution strategy more broadly replicating-
Yeah, I think.
What you've got here in Australia.
I think you have to. When you look at the market, and I mean, I've been fortunate to be involved in the North American market for 12 years now at an intimate level by being on the board of ACORD and understanding distribution intimately. When you look at that market, you have to draw that conclusion to say, "What comes first, the chicken or the egg?" Because the reality is there is such a vast amount of distribution in that area that would gain greatly from what we can do and have done and could execute. So you have to sit back and say, "Well, do you drop the technology in or do you look at the distribution side of it?" That's what we're prosecuting at the moment, looking across both sides.
Yeah. Thanks for that fulsome answer. I mean, arguably the distribution side of it is probably the first step, right? As opposed to the technology side.
Well, yeah. Which, that's exactly right. Which comes first, the chicken or the egg? Do you drop the technology in, or do you get the distribution and then drop the technology in?
As long as you get the chicken and the egg.
Well, we want both if we can. Yeah. Potential. Thanks, Josh.
Okay. Just the last question I had for Stephen, please. In respect to I know you sort of tried to unpack the difference between the IFRS numbers, the EBITDA line, organic and, I guess, the 100% basis. Are you able to sort of help us understand at what stage you're at with that investment in head office and IT, and at what point we will start to see some of that operational leverage really to come through in the organic line?
I think, I guess I'm trying to flag a little bit today on the call that a fair bit of that cost base is now what you might call rebased to where we are now to allow us to move forward and not have such increases going forward. I think we're signaling we're about to the point now. Obviously, we've made some investments into, as you've heard today, the AI and the IT, et cetera, that allow us to drive further productivity and efficiencies through our businesses. I do think that, as I said on the call there, the difference between the revenue growth and the EBITDA growth, they will start to converge even in the second half now. Those benefits will start to come through from here.
Okay, wonderful. Thanks for your time.
Pleasure. Thanks, Jason.
Thank you. Your next question comes from Julian Braganza from Goldman Sachs. Please go ahead.
Hi, guys. Just a couple of quick ones from me. In terms of just the guidance relative to previous comments made, just want to be clear, that 4% NPAT growth into FY 2024, does that include IBA or is it just trapped capital?
It's mainly trapped capital. You'll recall we bought Insurance House in around about mid-August, there is still a month and a half that does flow into 2024. There's a fair bit of run rate that comes from the trapped capital program. Even in particular, our M&A team were quite busy in December closing out quite a few deals. There's actually quite a few transactions that have barely had an impact on the first half 2023. They'll come through in second half 2023, let alone first half 2024. Yeah, it's... There is a little bit from Insurance House as well.
Okay, perfect. Just lastly from me, in terms of, just in terms of Trowbridge, I mean, are there any risks there that we should be, we should be thinking about at this stage, just given where things are at?
The Trowbridge Report's publicized. It's been given to everybody that participates in that market and it's fully detailed out the REM distribution and then the potential conflicts and stuff like that. Not one person's rung us up and said, "This should change." Nobody said, "It doesn't work at this stage." I worried I'd wasted our money in getting an independent review done on it. We'll continue to roll out the third stage of it over the course of the next couple of weeks and then we'll put it to bed. At least what I've done is explain to the market with somebody independent like John doing a review over everything, how REM works in Strata.
If everybody's aware of it, knows what it is and is happy with the status quo, then the status quo will probably stay, in my view.
All right, great. Cheers. Thanks, guys.
Thanks, Julian.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Kelly for closing remarks.
Okay. Look, I don't want to hold you up. Thank you very much. I don't want to hold you up. We're very proud of what we just presented and we're very strong that this company can continue along the lines we've articulated. Thank you for listening to us this morning and we'll keep briefing you as we improve or changes occur in our business. Have a good balance of FY 23.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.